June 8, 2006
US Wheat Review on Wednesday: Ends firm; kansas city board of trade leads before USDA data
U.S. wheat futures ended firm Wednesday, led by gains in Kansas City Board of Trade hard red winter wheat on fund buying and positioning ahead of Friday's U.S. Department of Agriculture wheat production and ending stocks reports, brokers said.
A recovery in silver and gold futures, gains in CBOT corn futures, and some easing in the dollar gains also aided wheat, they noted.
The USDA has said that it will resurvey farmers in key wheat growing states of Kansas, Oklahoma, and Texas as to 2006 wheat acreage for this report following the lingering drought.
Many wheat traders say that a new survey could result in smaller U.S. winter wheat production data.
The average analyst estimate for U.S. total wheat production was 1.859 billion bushels, less than the USDA May estimate of 1.873 billion and well below the 2005 production tally of 2.105 billion bushels.
U.S. 2006 all-winter wheat production was seen at 1.299 billion bushels, with estimates ranging from 1.270 billion to 1.335 billion bushels. The USDA May estimate for 2006 all-winter wheat production was 1.323 billion bushels while 2005 U.S. all-winter wheat production totaled 1.499 billion bushels.
Analysts expected the USDA to report U.S. hard red winter wheat production of 690 million bushels, below the USDA May estimate of 715 million bushels and well below last year's 930 million bushels.
U.S. 2006 soft red winter wheat production was seen at 358 million bushels, above the USDA's May estimate of 356 million and well above last year's crop of 309 million bushels.
U.S. 2006 white wheat production was seen at 250 million bushels, just below the USDA's May estimate of 252 million and below the 2005 U.S. production tally of 260 million bushels.
CBOT July wheat ended up 2 3/4 cents at US$3.87 3/4 per bushel.
Speculative funds were late buyers after selling 5,000 contracts by 1330 EDT, brokers said.
CBOT wheat spread trade was also noted, with Fimat spreading at least 4,000 September/July, they added.
First notice day for deliveries against the three U.S July wheat contracts is June 30.
In Chicago, July is the last month to deliver CBOT SRW wheat with five parts per million vomitoxin, brokers noted. New CBOT delivery specifications, effective with the September delivery cycle, reduce the level of vomitoxin a taker of wheat can request at load-out from five parts per million to four parts per million.
Vomitoxin, or deoxynivalenol, a product of Fusarium graminearum, or head scab, can make humans and animals ill. Although vomitoxin wasn't a problem last year with the U.S. soft red winter wheat crop -unlike the spring wheat crop-previous problems prompted the CBOT to develop new vomitoxin specifications for deliverable wheat to be effective as of September 2006.
Midday spot U.S. HRW Gulf barge bids rose 2 cents Wednesday while spot SRW bids fell 1 cent, cash sources said.
In global wheat news, European Union cash wheat prices were flat to weak Wednesday. The E.U. grain management committee will meet to discuss licenses Thursday.
In export news, Jordan is tendering to buy 50,000 tonnes of wheat while Syria said was selling 50,000 tonnes of wheat, including 25,000 tonnes of durum and 25,000 tonnes of soft milling wheat.
Kansas City Board of Trade
KCBT July wheat closed Wednesday up 8 3/4 cents at US$4.87 after falling to a low of US$4.74 -- well off the May 23 near-10-year high of US$5.22 1/2.
Spot cash 11% and 14% U.S. hard red wheat basis bids were unchanged Wednesday, according to the KCBT.
Kansas wheat producers noted in Day 3 of the Kansas Wheat Harvest Report the slow progression of the state's annual winter wheat harvest. Forecasts called for mostly clearing HRW harvest weather and hot temperatures during the week following this week's harvest-delaying rains.
Minneapolis Grain Exchange
MGE July settled up 7 3/4 cents at US$4.58 1/4 per bushel.
Cash spring wheat basis bids were mixed Wednesday, cash sources said. Wednesday's Minneapolis wheat receipts totaled 195 railcars versus last year's 40 railcars. There were zero durum receipts versus last year's 57 cars.